Answer :
Congress passes legislation that increases the federal minimum wage from $7. 25 to $9. 0. For firms that hire large quantities of unskilled labor this can be expected to cause an increase in the price of the goods and services they sell due to a shift of the decrease in supply curve.
Minimum wages are defined as the bare minimum of payment that an employer is compelled to pay wage earners for labor completed over a specific time, which cannot be decreased by collective bargaining or individual contracts.
Minimum wages can be established by legislation, judgment of a competent authority, wage board, wage council, or industrial or labor courts or tribunals.
The goal of minimum wages is to safeguard employees from unfairly low compensation. It ensures a decent wage for those who are employed and require such protection. Minimum wages can also be part of a strategy to combat poverty and eliminate inequality, particularly disparity between men and women, by advocating the right to equal pay for equal labor.
When workers earn a raise in pay, they demand more goods and services , causing prices to rise. Wage rises effectively increase general business expenditures, which are passed on to consumers as higher pricing.
The supply curve depicts the relationship between the cost of a commodity or service and the amount delivered over a specific time period. A typical instance will show the price on the left vertical axis and the amount delivered on the horizontal axis. A decrease in supply raises the equilibrium price while decreasing the amount requested. To establish what happens to the equilibrium price and quantity when both the supply and demand curves move, you must first know which curve shifts and how much each curve shifts.
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